Garments packing cost calculation is described in this article. In garment packing, the level of skill required varies from situation to situation. The outer packing, pressing, and ironing processes involve hard work, which is mainly carried out by men. Depending on the physical difficulties involved in the job, women workers are used for primary packing and attachment of packing materials.
Figure 1: Garments packing department
Factors of Garments Packing Cost Calculation
Following are the important factors which have direct influence on the garments packing cost calculation in garments industry.
Packing material number: There is an increase in complexity in the packing process when the number of packing materials increases. Therefore, the packing process is delayed for each material as the number of packing materials increases.
The garment’s style features: According to the style of the garment, the pressing process and fold time will increase, thereby increasing the cost.
Assortment type and outer packaging: The assortment process consists of arranging the primary packed material into carton boxes. This is a requirement of the customer. The different types of assortments are as follows.
Solid size and solid colour: There is one size and one colour of garments in each box
Solid size and assorted colour: There is one size and different colour of garments in each box.
Assorted size and solid colour: Each box contains different size as per requirement of buyer and one colour of garments. the ratios of size will be based on customer requirement.
Assorted size and assorted colour: Each box contain different size and different colour of garments.
Flow chart of Packing Department
The process of packing department include the following step one by one that’s flow chart of packing department
Initially, pressing the garments.
Then, folding and packing (primary packing like poly bag)
Subsequently, attachment of packing materials like tags, stickers and etc.
Next, assorting and packing into carton boxes.
Finally, strapping and tapping the boxes.
The following examples will details the cost calculation process involved with garments packing cost calculation in garments industry.
Exercise: Garments Packing Cost Calculation
Example 1: A garments packing department of a garments industry received an order of T-shirts with quantity of 10,000 garments. The department is required to press the garments and pack them the following way. The 5 T-shirts need to be packed in a single pouch, each with an insert card, and each with its own brand name tag. Each pouch is attached to a small barcode sticker and size sticker. There are 50 pouches in a carton box. A big barcode sticker is applied to every carton box, and then the carton boxes are taped with brown gum tape. Each tape roll can pack 5 carton boxes. This company has a pressing and packing capacity of 1,000 garments per day if it works one shift per day. There are 10 pressing workers in the department who are paid Rs.250 per shift. There are 15 packing workers in the department and they are paid Rs.200 per shift. The raw material costs of the order are provided as follows: the cost of a pouch is Rs. 2, the cost of a carton box is Rs. 40, the insert card is Rs. 0.70, the price of a tag is Rs.0.50, the price of a small barcode sticker is Rs. 0.30, and the price of a size sticker is Rs. 0.40. Bullets (to tag brand tags) are priced at Rs. 15/100 bullets, big barcode stickers are priced at Rs. 1.50, and gum tape is priced at Rs. 30 per roll. Overhead expenditures average Rs. 2000 per day for the department. Now calculate garments packing cost per garments with 10% profit.
Solution
Step 1: Calculate number of shifts required to complete the order
The order quantity= 10,000 garments
Daily production= 1000 garments
Number of shift required to complete the order= Order quantity ÷ daily production= 10000÷1000= 10 shift.
The company works one shift per day. hence number of days to complete the order is 10 days.
Step 2: Calculation of labour cost
The operator in this garments packing department are 10 operators in pressing, 15 persons for garments packing
Labour cost for pressing operators= Number of labours × total working shifts × wages per shift= 10×10 × 250= Rs. 25,000
Labour cost for garments packing person= 15×10×200= Rs. 30,000
Total lobour cost= 25000+30000= Rs. 55,000
Step 3: Calculation of raw material cost
Pouch
During packing, 5 garments packing in one pouch
Number of pouch required to complete the order= 10000÷ 5= 2000 pouches
The total cost of pouch= 2000× 2= Rs. 4000 [ the cost of per pouch is Rs. 2]
Carton box
Each carton box consists of 50 pouches.
Number of carton box required= 2000 ÷ 50= 40 carton
The total cost for carton= 40 ×40= Rs.1600 [ Per carton cost is 40]
Insert card
the price of the card is Rs. 0.70
Each garment is inserted with one card.
So, Insert card cost= 10000× 0.70= Rs. 7,000
Brand tag
The price of the tag is Rs. 0.50
Cost of tag= 10000× 0.50= Rs. 5000
Bullets
The price of the bullet is Rs. 15/100 bullet.
Total cost of bullets= 10000× 0.15= Rs. 1500
Stickers
Cost of the small barcode sticker is Rs. 0.30 and the size sticker is Rs. 0.40. Each pouch consists of one small barcode and one size sticker. Total pouch required for this order is 2000. Total number of carton box used for the order is 40. hence, the number of big barcode sticker required 40 as each carton contains a big bar code sticker
Total material cost= 4000+1600+7000+5000+1500+1460+240= Rs. 20,800
Step 4: Calculation of overhead costs
The average overhead expenditure per day is Rs. 2000
Total number of working day for this order is 10
Hence, overhead cost for this order= 2000× 10= Rs. 20,000
Step 5: Garments packing cost calculation per garments
Total garments packing cost= Labour cost+ material cost + overheads= 55,000+20,800+ 20,000= Rs. 95,800
Total garments packing cost with profit= 95,800+ (95,800 ×10%)= Rs. 1,05,380
Packing cost per garments=(1,05,380 ÷ 20000)= Rs. 5.27
Packing cost per garments is Rs. 5.27
Example 2: A Garments packing department received an order for 30,000 Men’s woven pants with a size ratio of 1:2:2:1. The average production of the department is 2,000 garments per shift. As a basic order, the hangers will cost Rs. 3, Rs. 4, Rs. 5, and Rs. 6 respectively for sizes S,M, L, and XL. The pants should be packaged in the following manner; each pant should be placed in a hanger and covered with a poly bag. Keeping the covered material in a symmetrical arrangement in a carton box with a size ratio of 2:4:4:2, after packing it into a carton box, the box was strapped with plastic tape and adorned with a sticker stating the content and customer details. During the pressing and packing process, 20 workers were employed, of whom 7 were involved in pressing, 8 in inserting hangers, and 5 in inserting poly bags. The worker is paid Rs. 250 per shift for pressing, Rs 230 per shift for hanger inserting, and Rs. 200 per shift for packing. The sticker costs Rs. 0.85 per piece and the plastic strap costs Rs. 5 per meter. A strapping machine is rented for Rs. 70 per hour from an external concern. The machine can pack 20 boxes per hour. Each poly bag costs Rs. 0.30 per bag and each carton box costs Rs. 10 per box. Take into account that each carton box consumes 1.50 metres of strap. Every month, the company spends Rs. 4,000 on other expenses, Rs. 10,000 for rent, Rs. 30,000 for other staff salaries, and Rs. 6,000 for power. If the department works 26 days per month, calculate garments packing cost per garments for this order with10% profit.
Solution
Step 1: Calculate number of shifts required to complete the order
The order quantity= 30,000 garments
Daily production= 2000 garments
Number of shift required to complete the order= Order quantity ÷ daily production= 30,000÷2000= 15 shift.
The company works one shift per day. hence number of days to complete the order is 15 days.
Step 2: Calculation of labour cost
The operator in this garments packing department are 7 operators in pressing, 8 person for hanger insert, 5 persons for garments packing.
Labour cost for pressing operators= Number of labours × total working shifts × wages per shift= 7×15 × 250= Rs. 26,250
Labour cost for hanger insert person= 8×15×230= Rs. 27,600
Labour cost for garments packing person= 5×15×200= Rs. 15,000
Total lobour cost= 26,260+27,600+15,000= Rs. 68,860
Step 4: Calculation of raw material cost
Hanger cost
There are four different hanger sizes with different price.
Total number of garments= 30,000
The size ratio= 1:2:2:1
Sum of the ratios=S:M:L:XL= 1+2+2+1= 6
The number of hanger require
For S and XL size= (1/6 × 30,000)= 5,000 hangers required.
For M and L size= (2/6 × 30,000)= 10,000 hangers required.
Hence, the hanger cost
Cost of the S size hanger= 5,000 × 3= Rs. 15,000
Cost of the M size hanger= 10,000 × 4= Rs. 40,000
Cost of the L size hanger= 10,000×5= Rs. 50,000
Cost of the XL size hanger= 5,000× 6= Rs. 30, 000
Total cost of the hanger= (15,000+40,000+50,000+30,000)= Rs. 1,35,000
Poly bag cost
Each garment hanged with a poly bag. So that, total poly bags used is 30,000.
Cost of per poly bag is Rs. 0.30
Total poly bag cost= 0.30 × 30,000= Rs. 9,000
Carton box cost
Each carton box consists of size wise assorted garments in 2:4:4:2 ratio. Carton box price Rs. 10 per box
For S and XL size= 5,000 garments
For M and L size= 10,000 garments
For S and XL size= 5,000 ÷ 2= 2,500 carton box
For M and L size= 10,000÷4= 2,500 carton box
Hence, total cost of 2,500 carton box= 2,500 ×10= Rs. 25,000
Strap cost
The price of the strap per metre is Rs. 5
Each carton box is strapped with 1.50 metres
Hence, total length required= 1.50 × 2500= 3,750 metres
The total cost= 5× 3,750= Rs. 18,750
Stickers cost
Cost of size sticker is Rs. 0.85 per sticker
Each carton box consists of one sticker
Hence, total sticker cost= 2,500 × 0.85= Rs. 2,125
Total material cost= 1,35,000+ 9,000+ 25,000+ 18,750+ 2,125= Rs. 1,89,875
Step 4: Calculation of other expenses
For strapping purpose, the machine is rented with the rent of Rs. 70 per hour.
The production capacity of the machine= 20 boxes per hour
Hence, the number of hours required to complete the order= Total number of carton box ÷ Hourly production= 2500÷ 20= 125 hour
Now, total cost for strap machine rent= 125 × 70= Rs. 8,750
Step 5: Calculation of overhead cost
The company spends following costs as overhead in a month of 26 days
Rs. 4,000 for other expenses
Rs. 10,000 for rent
Rs. 30,000 for other staff salaries.
Rs. 6,000 for power.
Hence, the total overhead cost= 4000+10000+30000+6000= Rs. 50,000
Total overhead cost per day= 50,000 ÷ 26= Rs. 1,923.08
Overhead cost for these order= 1,923.08 × 15= Rs. 28,846.2
Step 6: Calculate packing cost of garments
Total packing cost= Labour cost+ material cost + other expense + overheads= 68,860 + 1,89,875 +8,750+ 28,846.2= Rs. 2,96,331.2
Total packing cost with profit= { 2,96,331.2 + ( 2,96,331.2 × 10%)}= 3,25,964.32
Packing cost per garments= Total packing cost ÷ order quantity= 3,25,964.32 ÷ 30,000= 10.86
Packing cost of garments Rs. 10.86 per garments.
Conclusion
These are the garments packing cost calculation process which is used in garments industry. If you have any questions about garments packing cost calculation, please feel free to ask me in the comments box. Please promote our article by sharing it on social media.
